I have a bridge to sell; a look at Mahama’s 24-hour economy rabbit hole
“We will introduce a 24-hour economy with incentives and tax breaks for manufacturers who will run extra shifts to create more room for employment.” – John Mahama
This, ordinarily a banal statement, is however political red meat given that next year is an election year. It was bound to set off a social media blitzkrieg, and it did. Reminiscent of the 70s British comedy series, Open All Hours, it has brought together an animated set of characters twisting themselves into knots in support, opposed by a vociferous, mostly supporters of the sitting New Patriotic Party (NPP) government.
Not to take anything away from the leader and presidential candidate of the National Democratic Congress (NDC), former President John Dramani Mahama, who is seeking a return to office at the 2024 elections, the term “24-Hour Economy” sounds pretty exciting. It evokes images of sweaty men and women, pockets stuffed with cash, working day and night to melodious chants of “Work and Happiness,” and of the skylines of Ghana’s major cities dotted by hundreds of smokestacks and white contrails evidencing massive industrial activity! Exciting times!
However, before addressing the main subject, a quick response to the many who have suggested that somehow critics, especially if NPP, are in a state of panic over what they see as a brilliant idea, and have also asked what is “our” alternative.
First, subjecting Mahama’s major economic policy is legitimate public discourse. It is the basis on which he is seeking the mandate as President to manage the affairs of Ghana from 2025. As citizens, of whatever political stripe, we have a stake in ensuring that only the best ideas are curated for the purpose. Mahama’s 24-Hour Economy idea has its admirers, even fanatics. So are its legitimate critics.
Secondly, as a sitting Vice President, there are many compelling initiatives NPP’s presidential candidate has championed successfully. It speaks to his capacity to offer and vigorously defend a vision of the future as his political platform. As a good General who chooses his battleground carefully and wisely, he is not driven by what his opponent says he will do if elected, or when he says it. For an opposition candidate seeking a second bite of the cherry, it is normal to take the first shot and he has. And it will be tested.
Lastly, if Mahama were to win the presidency, he will try to implement his ideas, including the current one. I do not believe his 24-hour economy idea is a product of a well-thought-through process. I am on record describing it as a fatuous Rabbit Hole and have a duty to explain that. This piece is my attempt to flesh out my initial thoughts. Now, to the issues at hand.
So what is this “24-Hour Economy” being plugged as some sort of novel economic turnaround strategy to rescue Ghana’s economy? (I will use 24HE interchangeably with the “24-Hour Economy”)
I found that depending on who you ask, you could be met with stony silence, suspicion, or confused thoughts. Probably the most notable person I asked, first because he seemed to like the idea and had made several supportive social media posts to that effect, and also because I have come to expect, over the years, a high level of unbiased analysis from him, was Dr Theo Acheampong,an Economist and Political Risk Consultant. He is well known for his commentary on Ghana’s economy, energy sector, and politics on social media, and in the Ghanaian and international press.
He opted to not respond.
He did not say why, but I have a sneaky feeling he did not want to be in the middle of a political football match either. A post he made not long after confirmed my suspicion. In this post, he seemed to suggest the existence of a landmine of “traps, cliques, and people’s views and egos, including the politically-tainted ones” on Facebook, admonishing us all to “always remember to keep your cool and sift through the diverse interests.”
I found the part about partisan interests a bit farfetched and distressing. I think the idea that partisan interests are ipso facto inconsistent with national interests is analytically deficient and I have said so many times. If it were not, no independent analyst should be cheerleading Mahama’s 24HE as if somehow Mahama is not politically tainted, whatever that means.
I however agree with him that we should all be cool-headed so as to safely navigate the competing interests in the public space. It will certainly be, in his own words, “VERY HOT on this [Facebook] platform from now onwards until the December 2024 elections.” – (Emphasis his).
Wild, Crazy Parties In The Night
Truth is, many in Mahama’s orbit are not prepared to stick their necks out on exactly what he means by a 24-Hour Economy, except for wheeling out fuzzy examples of what it could mean.
I even asked an economic advisor member of Mahama’s team, Luke Atazona. I drew a blank as well. Indeed, Luke was instead more keen to tell me what it was NOT about, wasting inches on his views on the performance of Ghana’s economy.
Frustrated, I had to turn to trusted sources again: Dr. Theo Acheampong and Prof. H. Kwasi Prempeh, Executive Director of CDD. By this time the narrative had shifted to the “Night Economy” as a proxy for Mahama’s 24 HE. (I will use NE interchangeably with the “Night Economy”)
A review of Facebook threads by Theo and HKP (as I affectionately call Prof. Prempeh) show articles touting the NE from various countries, and the subsequent commentary were either an unambiguous “defence” of Mahama’s 24 HE or at least a rejection of the criticisms levelled at it. Indeed, in one post titled “NPP Seeks to Create a Night Economy”, Theo quoted from the government’s 2024 Budget Statement, and, drawing equivalences between a Night Economy and a 24-hour Economy, critically asked:
“Given that the NPP also seeks to create a “NIGHT AND SPORTS ECONOMY”, I struggle to see the hullaballoo about Former President John Mahama of the NDC saying he’ll push for an expanded 24/7 economy? Doesn’t the same logistical and other constraints that some NPP firebrands have raised also apply here? Surely, both are good for the country and will create jobs. Question of semantics or the usual NPP-NDC politics?”
Unfortunately for both Theo and (probably) HKP, and the other people singing the same tune, their enthusiasm for a NE being a proxy for 24HE is not shared by Dr Nii Moi Thompson, an economist and advisor to Mahama under whom he served in the previous government.
Now, anyone familiar with Ghana’s current politics will know that there is no love lost between Nii Moi and Dr. Mahamudu Bawumia, the Vice President and presidential candidate of the NPP in the 2024 Election. He, Nii Moi, uses every opportunity he can to “attack” and deride the Vice President in ways that, to the uninitiated, might seem as if there is a personal, not professional or political animus between them. In typical fashion, Nii Moi, in a recent piece, and quoting the same parts of the 2024 Budget Statement Theo did, instead used it as cudgel to attack Dr. Bawumia (and the NPP government), stating, in derisive fashion, that “for some crazy reason, those
adversaries reduced the idea of a 24-hour economy to HAVING FUN IN THE NIGHT.” – (Emphasis Mine)
But for the fact that Nii Moi referenced Dr. Bawumia and the NPP, one could have mistaken this statement as repudiating the very people who are valiantly promoting the idea of the Night Economy being a proxy for Mahama’s 24-Hour Economy!
As you can see, the notion has clearly been rejected by a senior apostle of the Mahama “faith,” adding more fuel to the firestorm of confusion around what Mahama is proposing exactly.
But there is even a more practical matter that requires examination by those using the NE=24HE proxy argument.
A major example proponents have used to butress their arguments is that of the New South Wales (NSW) government in Australia, which does not only have a “24-Hour Economy Strategy” but also an “Office of the 24-Hour Economy Commissioner.”
Proponents missed the part where the NSW government states, unambiguously, that their 24-Hour Economy strategy is intended “to enhance and develop the night-time economy (how our people spend their leisure time after dark) to realise its huge social and economic potential.” – (Emphasis mine).
The intent is clear: when they talk about a 24-hour Economy, it is how people spend their LEISURE TIME after dark, not about the economy writ large nor about smokestacks! It resembles nothing that Mahama has proposed.
If you were to ask Nii Moi his view on this matter, consistent with what he has said of Dr Bawumia and the NPP, you should fully expect him to retort that “for some crazy reason, those knuckleheads working at the NSW government have reduced the idea of a 24-hour economy to, yes, HAVING FUN IN THE NIGHT!” Adding to this confusion is the implicit claim of novelty and originality. Whatever iteration of the 24-hour Economy he means, it is not a novelty, nor did it certainly originate from him.
Even in Ghana, as far as one could tell, the idea was most likely first mooted by then-CEO of Reroy Cables, Mrs Quartey-Papafio, as far back as 2016. Clearly, there is no consensus ad idem on the subject. Mahama and his team disagree with his independent advocates. Our hope of remotely understanding it is therefore to rely on what Mahama himself says the 24-Hour Economy is.
Mahama on The 24-Hour Economy
Mahama’s articulation of what he has in mind when he uses the phrase “24-Hour Economy” is hard to pin down. He first described it as an economy “with incentives and tax breaks for manufacturers who will run extra shifts to create more room for employment.”(Emphasis mine).
This seems to be in line with the part of the 40-Year National Development Plan (40-Year NDP), which Nii Moi, being a curator, referenced in his opinion piece. The NDP unmistakably proposed a “multi-shift 24-hour economy with 6/8-hour work days,” (previously suggested by Mrs Quartey-Papafio before the NDP was published), but departing from this, Mahama later added a raft of other businesses so now, in his 24-Hour economy, “hospital facilities, filling stations, manufacturers, construction companies, garbage collection companies, mining and extractive industries, agro-processing, harbours and ports, financial services, digital start-ups will operate a three-shift system 24/7.”
Mahama also added two features: that businesses will operate “in an atmosphere of safety and security” and that the 24-hour economy “ will be voluntary.” (Emphasis mine)
- A Mahama government will give businesses operating in over half the economy incentives, such as low power tariffs and tax breaks, for them to work three shifts over a 24-hour cycle
- Participation in the 24HE is voluntary, requiring businesses and manufacturers to opt in. (Mahama’s Senior Aide also now adds that State-Owned Enterprises will be drafted into the programme), and
- That his government will ensure the safety of people working graveyard shifts
This presents several lines of enquiry.
Policy Quagmire or Quicksand?
First, there is a lack of strategic focus in his proposal. One cannot say for sure if this is manufacturing as a vehicle for job creation by means of increased productivity strategy, or a general whole-of-economy “mobilisation”? What his proposal looks like is the latter: a bit like just throwing in everything to avoid close scrutiny. He is counting on the possibility that no one will argue with a “United Nations” job creation plan which seems to have something for everybody.
But the questions stare one in the face. For example, in which scenario would you expect garbage collection companies to be working three shifts and who will pay for it: wages, fuel, additional equipment/CAPEX etc? A new Isuzu P75e garbage truck from Europe costs roughly $225,000 (or GH¢2.7 Million). How many garbage collection companies can afford even five of these to run normal operations, not to mention three shifts of eight-hour cycles with downtime for maintenance in between? If you are thinking of a mass mobilisation of garbage companies, the numbers quickly add up.
Perhaps the most bizarre additions are digital start-ups and financial services. In which country can you find banks, fund managers, or insurance companies open all hours? What exactly would financial services be doing operating three shifts? By their nature, the former operates on a logic of all-hours availability, and the latter has been investing in platforms to ensure same. Banks are trying to move people away from their physical locations to digital platforms. They have call centres (often third parties) providing support to customers. The implementation of a Mobile Money Payments Interoperability System (MMPIS) has made it possible to move money seamlessly, as well as make payments across and between mobile money wallets and bank accounts around the clock. We could go on forever.
Simply put, what Mahama is touting as a new song with Grammy-winning potential is obviously a re-release of an old track on vinyl, which was previously on cassette when the world moved on to Spotify and other online streaming channels.
Vice President Bawumia is right in saying Mahama does not understand his own policy.
Secondly, even if you want to go out on a limb to grant Mahama’s iteration of this idea some legitimacy, you will hit the “time” block.
Take 1: Ghana’s main economic activity in many respects, and like in most places, takes place during waking hours. Even in industrially advanced countries, most businesses, including shops, malls, underground trains, airports etc, run mainly during waking hours and go to “bed” at some point, especially at night. Indeed, there is a reason why it said that when the markets are closed in New York it’ll be opened in Hong Kong and Tokyo. In this context, therefore, the idea of a 24-hour Economy, in a strict sense only a term of art. One half of the 24-hour cycle, 12 Hours (let’s call it “Day Shift”), is already accounted for. What would properly be left is the other half 12 Hours, which we shall call the “Night Shift.”
Take 2: The “Night Shift” half of the 24-hour cycle is already a beehive of activity, both in Ghana and in other parts of the world. Many of the business types Mahama proposed, including mining and manufacturing firms, already run three shifts. The NDP recognises this. There are other businesses, such as pharmacies, logistics companies, and hotels which work all hours. They may not run three shifts, but many operate 24 hours a day. Including construction companies that work all hours.
We expect people to let their heads down and party at the end of their working day, not during their most productive hours, so expecting entertainment facilities, which are at the heart of the Night Economy/ecosystems to operate three shifts is, for example, a dreamer’s dream.
Thirdly, targeted tax incentives, differentiated tariffs, and financing are quite a simple fare in the toolbox of industrial development initiatives, and there is a raft of them currently in place under government’s One District, One Factory, Strategic Anchor Industries, and the Automotive Industry Programmes, all of which have achieved varying levels of success.
Again, given the coverage Mahama anticipates, the purpose of incentives is defeated before it even starts. Incentives are generally used to achieve much narrower objectives, such as sectorally. Mahama’s plan instead cuts cheques to almost all Ghanaian businesses to engage in, in all likelihood, “unproductive” activities. The only way to describe this Father Christmas proposal is that it is meaningless.
Fourthly, the promise of significant power tariff adjustments for, especially manufacturing firms, has no solid foundation. There already exists differentiated power tariffs for manufacturing firms, including heavy industries such as steel and mines. Mahama’s plan is a pie in the sky for several other reasons, key of which are:
(1). There is little fiscal wiggle room to absorb the cost. Payments to IPPs at the end of August this year is hovering around 0.5% of GDP at GH¢4.4 billion, with stock of energy sector payables estimated at GH¢19 billion at the end of 2022 (Table: Ghana Domestic Payables 2021-2022), and;
(2). Residential users are already paying a high price (just take a look at your electricity bills) thanks in large part to the costly IPP power contracts entered into by the Mahama government. We have already shown that there is little fiscal space to assume more energy
costs. To achieve what Mahama proposes, he will have to shift the burden onto residential consumers from manufacturing firms. What he is proposing is more pain and misery for residential consumers, who are already feeling the effects of his costly IPP contracts, all in pursuit of a phantom 24-hour Economy idea.
There is no quick-fixing energy sector costs. We should first have a discussion over how to plug that 19 and growing billion cedis hole, not encouraging another round of fiscal recklessness.
Fifthly, a key driver of Mahama’s amorphous 24-hour economy is that there is a lot of unutilised manufacturing capacity and this presents an opportunity for a groundbreaking economic boom and job creation. But, manufacturing activity is already significantly high: much higher than the African average and that of our nearest regional competitor, Nigeria. (Fig. 1: Index of Manufacturing Production)
Furthermore, the most recent Competitive Industrial Performance Index 2023 shows that Ghana is doing very well on the Manufacturing Value Added to GDP Index, and appreciably well on the Industrialisation Intensity Index (Table 2: Manufacturing Value Added Indexes).
Even if we are to tackle low capacity utilisation, existing data points to prioritising technological, operational and human capacity deficiencies. Ghana does not do so well in both medium and high-tech manufacturing (Table 2), and, its overall estimated productive capacity is low at about 38%. The supporting ecosystem, such as transportation, private sector, human capital, and structural challenges (Fig. 2: Productive Capacity Index) are elements which demand pressing if not equal attention. There will be no use investing in increasing capacity utilisation and ramping up production at the scale proposed by a three 8-hour shift system, only to be choked off by say transportation and logistics bottlenecks. That is if we even have the human capacity to support such a ramp-up.
We have to learn hard lessons from the failures of previous industrial transformation initiatives, such as the Komenda Sugar Factory, as well as from the practical challenges encountered in implementing them, such as the One District, One Factory, and apply an incremental, commonsensical approach to the industrialisation, instead of making fatuous, grand statements like creating a 24-hour Economy.
Sixthly, except for unutilised manufacturing production capacity, there is no indication that the other businesses he listed have capacity problems, nor even if there is demand for additional output. There is no mention of bringing new industries upstream, which the Vice President has touched on many occasions. And there is no indication also of investing in the technological and operational capacity to support both supply and demand activities, and how this will drive transformational growth.
Seventhly, Mahama says his 24-hour Economic programme is voluntary. This is also another get-out-of-jail contraption by Mahama. Simply put, there is no guarantee that the promised thousands of jobs will materialise. Short of government fully financing private sector businesses, an idea, which, when even not envisaged under government’s One District, One Factory initiative, was stiffly opposed by the NDC and many Ghanaians, there is no way the level of employment expectations being raised by Mahama would be achieved.
At a time that we are cutting back on exemptions in order for government to retain more revenues to finance critical infrastructure development and social protection programmes, Mahama is proposing to hand out public funds in higgledy-piggledy fashion. This Mahama 2.0 is a recipe for disaster: the same lack of fiscal restraint that led to an economic meltdown when there was no global crisis in sight is what is being proposed once again.
Res Ipsa Loquitur
I have taken a look at Mahama’s conception of a 24-hour Economy and it is empty. Clearly, it is not well thought-through. In its current form, it is simply a fanciful term designed to elicit just the kind of emotional reaction it has garnered. There are no signs of sweaty men and women, pockets stuffed with cash, working day and night to melodious chants of “Work and Happiness,” nor of the skylines of our major cities dotted by hundreds of smokestacks and white contrails evidencing massive industrial activity! The 24-hour Economy Mahama is selling is simply a rebranding of the existing economy. There is nothing transformational or job-creating
about it. If you are tempted to believe it, I have a bridge to sell you.
Mahama’s 24-Hour Economy Rabbit Hole
Lastly, even if his 24-hour economy is well-defined (and we have demonstrated that it is not the case), Mahama is highly unlikely to follow through with anything he has promised. There are three reasons for this:
(1). If Mahama were to become president, it will already be a lame-duck term for him. He will not be facing Ghanaian voters again at any future election. He therefore has no incentive to either please the electorate or deliver on his promises. When he even had an election coming, he practically gave Ghanaians the middle finger with his “Dead Goat” riposte to the cries of citizens.
There will be no constraints on him. Dr. Bawumia, on the other hand, does not have this kind of problem. He will have to face voters again in 2028 for a second term
(2) Mahama himself has said that a four-year term is not enough for any government to achieve meaningful economic development. He is likely to use the first year of a presidency to try to set up a working government and to get his team in place. The kind of economic activities he has in mind, and the kind of institutional reconfiguration and reorientation needed will take another two to three years to be in place. His term in office will be over then, and
(3) There is a clear indication that Mahama and his team are selling Ghanaians porkies. He is promising to spend money we simply do not have. Government cannot finance a costly, haphazard non-plan plan. And he knows it. But he is not worried about it. Because he has no intention of delivering on the phantom 24-hour economy.
The author, Evron R. Hughes, is an Economic Advisor, and Director, External Economic Relations at the Office of the President. His professional interests lie at the point where Banking, Fintech, and Cybersecurity converge.